How lower-paid workers are getting their biggest pay raise in years
Summary
Lower-paid U.S. workers who changed jobs in July received their biggest pay raises in over three years, according to a Bank of America report. Wage growth was especially strong for hourly workers who switched jobs, while overall pay growth has slowed down for others.Key Facts
- In July, workers who switched jobs saw a 12.5% average wage increase, the highest in three years.
- Most of the large pay raises went to lower-paid, hourly workers in fields like hospitality, transportation, and retail.
- Lower-income households’ after-tax wages grew 4.7% year-over-year in August, faster than the 3.5% growth for higher-income households.
- Nearly 25% of U.S. workers are "functionally unemployed," meaning they are underemployed, unemployed, or earn poverty wages.
- The federal minimum wage has stayed at $7.25 per hour since 2009, while inflation has reduced buying power.
- Higher-income workers usually get bigger pay raises if they stay at their job, while younger or lower-paid workers benefit more from switching jobs.
- White-collar workers in sectors like finance and technology quit less often due to weak job growth and AI automation risks.
- There is a skills mismatch that gives job seekers more power to demand higher wages, especially in jobs supporting AI technology like construction and electrical work.
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